Inflation and housing prices are soaring faster than seen for many years, according to new official figures released Monday, continuing a worrying trend for Israel’s economy.

Overall, year-on-year inflation now stands at 5.2 percent for July, an increase of 0.8% in one month, and is rising at the fastest rate for 14 years, according to the numbers published by the Central Bureau of Statistics.

Although Israeli numbers are lower than in the US — where the rate appears to be slowing to 8.5% for July — the combination of price increases, interest rate increases, uncertainty in the technology sector, and fairly stagnant wages creates one of the most difficult economic environments in recent years.

On top of that, housing prices are rising at an annual rate of 17.8%, the fastest rate in a decade. Far from slowing down in response to rising interest rates, increases in house prices are rising again, up 2% between May and June 2022, compared to the period from April to May.

Prices are up in all regions except for southern Israel, and have risen most steeply in Jerusalem and in the north over the last month. But every part of the country has seen double-digit increases over the last year.

The average price of an apartment now stands at NIS 1,880,900 ($580,623) for the second quarter of 2022, an increase of NIS 80,000 ($24,695) from the first quarter of the year. In Tel Aviv, the average price for an apartment is now more than NIS 4,000,000 ($1,234,777), while in Ramat Gan, Kfar Saba, and Jerusalem, prices are over NIS 2,500,000 ($771,736).

The other key area which has seen substantial price rises is fuel. Over the last month, prices have risen by 8.7%, with increases over the last year topping 108%.

There are also increases in the indexes that drive prices for construction, agriculture, and transport. And these are reflected by rising costs for fresh fruit (8.5%); transportation (3.3%); and culture and entertainment (1.2%). Clothing and footwear dropped in price by 4%.

As a result of these increases, Israel’s consumer price index (CPI) rose by 1.1% in July. This means that since the beginning of the year CPI is up 4.4%, and looking at the trend over the last four months, the annual increase in CPI is now 5.9%. High as this may seem, it is below the OECD average of 9.6% for May, the last month for which data is currently available.

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QOSHE - Inflation and housing prices continue to spiral up, breaking new records - Danielle Nagler
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Inflation and housing prices continue to spiral up, breaking new records

9 10 23
16.08.2022

Inflation and housing prices are soaring faster than seen for many years, according to new official figures released Monday, continuing a worrying trend for Israel’s economy.

Overall, year-on-year inflation now stands at 5.2 percent for July, an increase of 0.8% in one month, and is rising at the fastest rate for 14 years, according to the numbers published by the Central Bureau of Statistics.

Although Israeli numbers are lower than in the US — where the rate appears to be slowing to 8.5% for July — the combination of price increases, interest rate increases, uncertainty in the technology sector, and fairly stagnant wages creates one of the most difficult economic environments in recent years.

On top of that, housing prices are rising at an annual rate of 17.8%, the fastest rate in a decade. Far from slowing down in response to rising interest rates, increases in house prices are rising again, up 2% between May and June........

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